FORECAST-2023-Gazprom’s exports may collapse to the volumes of the Soviet past

(Repeat message from December 30th)

MOSCOW, Jan 9 (Reuters) – Russian Gazprom’s exports to Europe and Turkey, which have fallen to record lows in post-Soviet history this year, will fall even further next year to Soviet-era levels of 50-65 billion cubic meters, analysts say.

Exports to non-CIS countries, including China, in 2022 collapsed by almost 46% to 100.9 billion cubic meters amid geopolitics, which almost led to the loss of the European market for Gazprom. Deliveries to China were planned to be about 16 billion cubic meters of this volume.

β€œI assume a drop in exports to Europe and Turkey from 85 billion cubic meters in 2022 to 65 billion cubic meters in 2023. Exports to China in 2023 could rise to 22 billion cubic meters,” said BCS Global Markets analyst Ron Smith.

Gas deliveries to Europe go only along the southern corridor – the Turkish and Blue Stream pipelines and through Ukraine, transit through which is less than half loaded due to disagreements between Moscow and Kyiv. The Yamal-Europe pipeline is not working due to retaliatory Russian sanctions, and Nord Stream has been blown up.

β€œIn 2023, there will obviously be a stronger drop, because in fact only the Turkish Stream plus China is working. The volume of deliveries to far-abroad countries will depend on many factors, both on the policy of Russia and the policy of Europe. That is, the interval can be quite large – from 60-70 billion cubic meters to 100-110 billion cubic meters,” said Alexander Gryaznov, director of S&P Global Ratings.

According to him, export to Europe can be either 20-30 billion cubic meters or 50-60 billion, depending on the development of events.

“The Europeans have done a lot to reduce their dependence on Russian gas, but the issue of next winter is still not resolved,” Gryaznov says.

Exports to non-CIS countries at the level of 55-69 billion cubic meters were last exported by Gazprom in 1980-1985, follows from Gazprom export data.

Following a drop in exports, Gazprom’s production in 2022 fell by 20% to 412.6 billion cubic meters, the lowest level since 2005. In 2015, gas production dropped to 419.5 billion cubic meters.

The drop in production figures this year did not affect the group’s financial results due to record high gas prices on the world market. For the first half of 2022, Gazprom reported a maximum profit of 2.5 trillion rubles in its entire history, the company did not disclose the figures for nine months.

Export earnings were set to set a new record, revenue in 2023 is likely to be below record levels but above normal years due to very high prices, however in the coming years as gas prices begin to correct, which should eventually happen , export earnings will drop significantly, Smith said. (Oksana Kobzeva, Vladimir Soldatkin. Edited by Anastasia Teterevleva)

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